Posted by Tina
David Stockman has a new book out today in which he warns of a big wake up call sized crash headed our way. Economists, experts and Obama apologists are already accusing him of going to extremes. But I remember people saying that George Bush’s warnings about housing finance laws being a potential danger to markets and the economy were nuts so I have to take the man’s concerns to heart. Business Insider quotes David Stockman on the policy to never let a crisis go to waste:
Then, when the Fed’s fire hoses started spraying an elephant soup of liquidity injections in every direction and its balance sheet grew by $1.3 trillion in just thirteen weeks compared to $850 billion during its first ninety-four years, I became convinced that the Fed was flying by the seat of its pants, making it up as it went along. It was evident that its aim was to stop the hissy fit on Wall Street and that the thread of a Great Depression 2.0 was just a cover story for a panicked spree of money printing that exceeded any other episode in recorded human history.
Stockman worked under Ronald Reagan as Director of the Office of Management and Budget and is considered a credible and knowledgeable voice:
In his upcoming book, The Great Deformation: The Corruption of Capitalism in America , Stockman lays out how we have devolved from a free market economy into a managed one that operates for the benefit of a privileged few. And when trouble arises, these few are bailed out at the expense of the public good.
By manipulating the price of money through sustained and historically low interest rates, Greenspan and Bernanke created an era of asset mis-pricing that inevitably would need to correct. And when market forces attempted to do so in 2008, Paulson et al hoodwinked the world into believing the repercussions would be so calamitous for all that the institutions responsible for the bad actions that instigated the problem needed to be rescued — in full — at all costs.
If you’re concerned about your own savings and investment you should read the entire article. another can be found here. Stockman doesn’t let either political party off the hook but addresses what he sees as insane policies that have transferred the free enterprise system to a game of craps. (My words not his) You might also want to buy his book.